Fitch Rts Hillsborough, CA COPs 2003 Ser A 'AA+/F1'

NEW YORK--(BUSINESS WIRE)--Aug. 12, 2003--Fitch Ratings assigns a 'AA+/F1' rating to The Town of Hillsborough, California's $15 million certificates of participation (water and sewer systems projects) 2003 series A. The long-term 'AA+' rating on the certificates of participation (COPs) reflects the underlying credit health of water and sewer enterprises of Hillsborough, an affluent San Mateo County town. (For further details please see Fitch Ratings press release dated August 12, 2003.) The COPs will mature on June 1, 2033. The short-term 'F1' rating is based on the support of a standby purchase agreement (SPA) provided by JPMorgan Chase Bank.

The SPA provides for the payment of the purchase price of tendered COPs during the daily, weekly and extended rate modes in the event the proceeds of a remarketing of the COPS following such a tender are insufficient to pay the purchase price. The SPA is sized to provide for the entire principal amount of the notes and 35 days of interest at the maximum interest rate of 12% and will expire on May 31, 2004 or upon the occurrence of other events of termination, according to its terms. The underwriter and remarketing agent for the bonds is J.P. Morgan Securities Inc.

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Interest accruing on the COPS will initially be determined at the weekly rate, but may be converted to a daily, extended or fixed rate. Interest during the daily and weekly rate mode will be paid on the first business day of the month. Bondholders have the right to tender their COPs on any business day during the daily or weekly rate modes with prior notice to the trustee and remarketing agent. Prior to conversion to the extended rate mode, Fitch must provide confirmation that the rating on the COPS will not be reduced or withdrawn as a result of such conversion. COPS are subject to mandatory tender upon the conversion to another interest rate mode, on the day following the last day of each extended rate period and upon the expiration, termination and, for COPS in the daily or weekly or extended rate modes, the substitution of the SPA. Fitch's short-term rating on the COPs will expire upon any expiration or termination of the SPA.

The COPs are issued to finance the acquisition, construction and installation of additional improvements to the Town of Hillsborough's water and sewer system and to pay cost of issuance.